For months now the handwriting has been on the wall regarding European sovereign debt, but we have had numerous cycles where, if one only watched the news on a "good" day, one would have thought the Euro debt problems had been solved.
Coming soon, by the sounds of things, big problems at some of the largest U.S. banks, nothing to do with Europe at all, will "resurface".
I don't believe that this time any will be bailed out.
People should remember to act now and call their local Congresscritter to complain about the continued overspending on the part of the U.S. government.
Bear in mind that after losing the election in November 2012, during those two months - no matter how bad the ecnomomy is at that point - the White House will act with utter vindictive cruelty on any and all non-left-wing Americans. The pain in the U.S. economy is undoubtedly to get progressively (like that word?) worse between now and then, so by then things will be quite painful.
If, when Congress returns in a few weeks, we can push for immediate cuts in Feral government spending - that will alleviate the pain and give some kind of chance for the next President and Congress in 2013 to save the economy from complete collapse. If we allow spending to go on unrestricted for the next year and half, there's a good chance that the debt ceiling debate comes up again before then. That may help Repubs in the 2012 election, but it also would be, I'm afraid, viewed as disastrous by the markets. If we can get Feral spending to start slowing down, the next President can continue the march towards balancing the budget.
This is going to be a rough ride, IMHO, by next spring.
I hope during the election season Obama is forced again and again to explain why he thinks having the U.S. become more like Euro-socialist states is a good idea. I don’t have the illusion that he or other like-minded progressives would ever let empirical evidence stand in the way of their flawed vision, but putting him on the spot repeatedly might slowly and surely educate the American public as to how lacking in scientific support his ideas are.
Reality 101. Great post! Talk about being between a rock and a hard place. bttt
Will congress listen (to U.S. voters), since it will be congress who votes? When watching congress regarding TARP, Zerocare, QE1, QE2, Debt Ceiling, I pray congress will listen. No confidence congress will listen.
I also foresee the possibility of several large banks being merged to save themselves--Bank of America with Wells Fargo, Citicorp with JP Morgan Chase, and several others.
I also foresee that Obama may finally "get the religion" and realize that a major overhaul of the income tax system to make it more business-friendly will now be on the table. The result: the most significant changes in our income tax laws maybe since the passing of the 16th Amendment.
The next big question is whe our own Default will happen.
what do US voters have to do with it?
the same “end of life as we know it” mentality that forced TARP down the throats of taxpayers via the US Senate, will be presented by all the usual actors, especially Hillary Clinton.
The first loss is the best loss. I sure hope the big US banks are unloading their Western European sovereign debt now and taking their writedown medicine. It is only going to get worse over there. The US government also should start posturing now forewarning Western Europe we cannot afford additional contributions to bolster the World Bank and IMM to eventually bailout Western European banks. Good luck, Germany.
“U.S. voters will not permit a bailout out of European banks or sovereigns by any U.S. government action, be it via the Treasury or the Fed.”
Sorry to burst your bubble there but the US voters won’t even be told about such actions, the pre-cursors to which have already begun, and certainly won’t be able to stop them.
U.S. voters will not permit a bailout out of European banks or sovereigns by any U.S. government action, be it via the Treasury or the Fed.
But, will we learn of actions taken by the Fed in secret (as is their wont) only when it is too late? I don't think any of us will be surprised to hear about it well after the deed is done.
I find it interesting how the financial news in the U.S. cycles nicely so as to avoid having depressing days continue much beyond a week. For months now the handwriting has been on the wall regarding European sovereign debt, but we have had numerous cycles where, if one only watched the news on a "good" day, one would have thought the Euro debt problems had been solved.
Yes, I've commented about this as well. It seems to me that the “European problems” meme is trotted out on days in which they need to provide cover for some other domestic US bad news. Today is an excellent example, tons of bad US news so we are told from the onset that “European problems” are leading to a stunning drop from the open. Heck, at this point we are told that an un-named large European bank was forced to go the EU emergency funds window overnight since the inter-bank lending appears to be “frozen.” No names, no sources (for a storyline of massive implication!).
Coming soon, by the sounds of things, big problems at some of the largest U.S. banks, nothing to do with Europe at all, will "resurface".
Well there are problems within the US operations of large EU banks, that is certain. The real question is the level of exposure to toxic European debt in the US banks. So far the stock markets has proclaimed they believe that the level is non-trivial at this point. But that doesn't argue against your point, I too believe that there is a great deal of toxic assets on the balance sheets of all the major US banks that should have been eliminated in the past, but nonetheless is still a powerful negative presence. (We already know that bailout $$$ don't always go for their “intended” use.)
I don't believe that this time any will be bailed out.
One would hope not, but I can't say that I am sure that we are not going to see it happen again. (The past has been a reliable prologue of the future at this point.)
People should remember to act now and call their local Congresscritter to complain about the continued overspending on the part of the U.S. government.
Absolutely, to anyone willing to entertain truth, over-spending by governments (which has been solidly encouraged by the central banks) is the single most important factor as to why the global economy is in its current state. It is that simple, and that clear. But will continue to be denied over and over again!
Bear in mind that after losing the election in November 2012, during those two months - no matter how bad the ecnomomy is at that point - the White House will act with utter vindictive cruelty on any and all non-left-wing Americans. The pain in the U.S. economy is undoubtedly to get progressively (like that word?) worse between now and then, so by then things will be quite painful.
Agreed (sadly).
If, when Congress returns in a few weeks, we can push for immediate cuts in Feral government spending - that will alleviate the pain and give some kind of chance for the next President and Congress in 2013 to save the economy from complete collapse. If we allow spending to go on unrestricted for the next year and half, there's a good chance that the debt ceiling debate comes up again before then. That may help Repubs in the 2012 election, but it also would be, I'm afraid, viewed as disastrous by the markets. If we can get Feral spending to start slowing down, the next President can continue the march towards balancing the budget.
Yeah but the Congress is going to be presented with the exact opposite. We all know that this jackal's “jobs plan” is going to be comprised of: Higher Taxes, more Stimulus spending (I guess about $800 billion), and phantom cuts over 10-12 years that will never occur. I guarantee that those 3 elements are what will be revealed.
And, we will see a tsunami of pressure ginned up by the administration (and other Dims) and the propaganda media like never before (to date). It will be a non-stop chorus of “The TEA party & Republicans are destroying the economy merely for political reasons. They are willing to hurt ALL Americans in order to hurt the POTUS.” And so forth, endlessly. I also won't be the least bit surprised if some horrific “event” occurs that is blamed on the TEA Party to further the point. I won't be surprised at all. That is how high the stakes have been raised.
This is going to be a rough ride, IMHO, by next spring.
It is going to get “rougher” at an increasing rate every day for the foreseeable future (which ain't that long at this point!).
I agree.
"U.S. voters will not permit a bailout out of European banks or sovereigns by any U.S. government action..."
I disagree. A majority of the U.S. electorate is composed of morons.
I recall reading articles (the Economist, I think) about this several years ago, like 2007 or so.
If it happens before the Election our voters won’t have any say in the process. The Fed and Treasury will do whatever they like no matter what Congress says about it and it is unlikely that Congress would do anything beyond yelling, anyway.